NEW ZEALAND ACCIDENTCOMPENSATION AND THE

FOREIGN PLAINTIFF: SOMECONFLICT OF LAWS PROBLEMS

G. Shapira*

The motor car and the teles ision aerial and our technological reolution ingeneral have led to that extraordinary growth in the social importance of tilelaw of delict which also explains the changed role played by it in the conflictof laws. They have also led to a shift in the social function and legal nature ofdelictual liability and therefore of the nature of the conflict of law sconcerning it.'

I. POLICY AND STRUCTURE OF THE NEW ZEALAND ACCIDENT

COMPENSATION ACT 1972

This article examines some conflict of laws implications ofcomprehensive, no-fault, accident compensation legislation. The pur-pose is to assess the impact of the new concept on traditional and modernconflicts rules. The particular legislation is the New Zealand AccidentCompensation Act 19722 but the problems considered may arise in thecontext of any legislation replacing common law rights by statutorycompensation. The term "foreign plaintiff" refers to persons in twocategories: non-residents injured while on a visit to New Zealand, andpersons injured in some other country who bring action in the NewZealand courts. As we shall see. in both situations adequate recoverymay be hindered by the Act. Part of the reason is its policy towards

Mag. Jur. (Jerusalem). LL.M. (London): Visiting Associate Professor. Facultyof Law. University of British Columbia: of the Faculty of Law. University of Otago.New Zealand. I am grateful to Margaret Mulgan. LL.B.. M.A. for her assistance inpreparing this article.

' Kahn-Freund. Delictual Liability and the ('eifltc i of Lai %. 11968111 Ri( Ltit

DES COURS 1. at 9 (Acad~mie de Droit International).2 Accident Compensation Act 1972. Stat. N.Z. 1975. 2-1409 treprinted iith

amendments), as amended by Stat. N.Z. 1977. no. 139. and Stat. N.Z. 1978, no. 36.The principal Act. Accident Compensation Act 1972. Stat. N.Z. 1972. no. 43. came intoforce on April 1. 1974. Unique and radical. it was the subject of worldv, ide attention andmuch literature: see Palmer. Compensation 'for Peroial Intur.I A Reqifteni for theComnmon Law in New Zealand. 21 AM. J. Comt. L. 1 (1973) and the literature cited innote 1: Szakats. Coniniunitvi Responsibilitv for Accident Injuries: The XVtc ZealandAccident Compensation Act. 8 U.B.C.L. Rr\. 1 (1973): and Harris. Ait-udentCompensation in New Zealand: A Comprehensive Iniuranm e Siw.tem, 37 MODERN L.REV. 361 (1974). The international aspects of the Act were considered in Webb &Auburn, New Zealand Conflict of La s -4 Bird's Eve liett . 26 INT. & CotP. L.Q.971. at 983-91 (1977).

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foreigners - persons with no durable or work relationship to NewZealand. To that extent the foreign plaintiff's rights are a matter ofinterpretation of the relevant statutory provisions. More interesting arepotential conflict of laws problems likely to arise in a foreign tort caseinvolving tort and no-fault systems. It is not proposed here to discussfully the statutory provisions relating to, or affecting, foreigners. Thiswould involve a detailed analysis of complex legislation which is, by andlarge, the product of New Zealand conditions. Rather, it is intended toconcentrate on these aspects which are germane to conflict of lawsproblems. Conflicts of this nature may become more common with theincrease in no-fault compensation legislation. 3

The Pearson Committee, 4 recently reporting in the United Kingdom,recorded a notable spread in many countries of special compensationlegislation. The transformation from tort to no-fault compensation isespecially evident in the areas of industrial and road accidents.- So farNew Zealand is the only country which operates a comprehensivecompensation scheme, covering all personal injury or death caused byaccident regardless of the circumstances. Concomitantly, previouscommon law rights were entirely abolished.

The architects of the Act viewed the common law tort process as "afragmented and capricious response to a social problem which cries outfor a co-ordinated and comprehensive treatment"." The philosophical

:1 Comprehensive accident compensation legislation was proposed for Australia:

COMPENSATION AND REHABILITATION IN AUSTRALIA: REPORT OF THE NATIONAL

COMMITTEE OF INQUIRY (A.O. Woodhouse Chairman July 1974). The NationalCompensation Bill, based on the Report, passed the House of Representatives and wentto the Senate. With the change of government in Australia in 1975, it was shelved. Thenew government set up a steering committee in May 1976 to consider a nationalcompensation programme.

I REPORT OF THE ROYAL COMMISSION ON CIVIL LIABILITY AND COMI'ENSArION

FOR PERSONAL INJURY (Lord Pearson Chairman 1978) [hereinafter cited as PEARSONREPORT]. Volume Three, OVERSEAS SYSTEMS OF COMPENSATION, is a comprehensiveand original comparative study of the subject.

"1 Workmen's compensation acts have been in force throughout the Common-wealth since the turn of the century. All Canadian provinces have enacted speciallegislation replacing actions in tort for work injuries. Motor accidents in Canada arecovered by a variety of no-fault motor insurance schemes administered either by theprovincial government or privately. Some of the schemes are compulsory and some areoptional: in none of the provinces has the right to take action in tort been abolished.

By 1948 each of the jurisdictions in the United States had a no-fault Workmen'sCompensation Act. They vary as to the type of employment covered and some of themare elective rather than compulsory. Employees outside the cover of state laws rely ontort action for compensation but rights under common law have generally been given upby those entitled to statutory compensation. For a comprehensive evaluation of stateworkmen's compensation laws in the U.S., see REPORT OF THE NATIONAL COMMISSIONON STATE WORKMEN'S COMPENSATION LAWS (1972).

No-fault legislation for road accidents has been introduced in 28 states. The rightto sue in tort has been generally preserved, subject to a threshold. See Henderson.No-Fault Insurance for Automobile Accidents: Status atd Effect in the United States, 56ORE. L.R. 287(1977).

' COMPENSATION FOR PERSONAL INJURY IN NEW ZEALAND: REPORT OF THE ROYAL

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Accident Coipen!ato [i and th " or'en I'lntil!

and practical considerations that gave birth to the Act are encapsulated inthe following paragraph from the Woodhouse Report:

The moral basis for the application of the fault principle cannot be explained

in terms of the legal conception of negligence, becaue tile test ol negligenceis objective and impersonal. Moreo\er it becomes quite irreleant in a s\ stemwhich requires thorough compulsor. insurance that the loss be born not byindis idual defendants but b\ the \%hole conmunit\ All this night not matterif the principle wvas justified b\ the achie\etnent. but it is not Nobody cancredit with any assurance the outcome of a damages action There arc longdelays inseparable from the ,er\ nature of the process The in\estigator\procedure and the trial of the action in Court are costly. And throughout the

plaintiff is not only left in some considerable suspense. but lie is also left to

carry his loss without assistance. Fmall\ . during all fills period there is notmerely an absence of any encouragement for him to minmise his potentialdamages by returning to \,ork. in fact the con\erse applies. Manx plaintiffsare reluctant to work until their claim is fmalised lest the damages be reducedin proportion to their effort.,

The -fault- principle has been further attacked for being unfair toboth plaintiff and defendant. If fault is proved, the defendant has to paydamages irrespective of his intention, personal shortcomings and degreeof culpability. On the other hand. a plaintifff unable to prove faultrecovers nothing regardless of his own innocence. The moral overtonesof the fault theory were held to be misplaced: negligence did not reflectpersonal attitude but merely a deviation from an objecti\e standard ofcare. Besides. social attitudes have changed:

People have begun to recognize that the accidents regularly befalling largenumbers of their fellov, citizens are due not so much to hunan error as to thecomplicated and uneasy ensirontent ich e\er\bod\ tolerates for its

apparent advantages. The risks are tile risks of social progress. and if thereare instinctive feelings at work toda\ in thi general area. they are notconcerned with the greater or lesser fault of mdi\ iduals but \% ith the \% iderresponsibility of the whole commumty.'

Other objections to the common law process were the length. costsand uncertain results of litigation. the clogging of the courts" and thehindering effect of delayed lump sum settlement on return to work. TheCommittee found no compelling proof that civil liability in negligencehad a deterrent effect. Other factors. such as penal legislation.enforcement. education and prevention were considered far moreeffective. t)

COMMISSION OF INQUIRY. para. I (Woodhouse. J. Chairman Dec 19671 Iheremaltercited as WOODHOUSE REPORT ].

7 Id. at para. 82.Id. at para. 89.

* In England and Wales. although onl\ one per cent of all tort claims reach the

courts, personal injury cases make up o\er three quarters of the cases set do\%n forhearing in the Queen's Bench Dis ismon of the High Court. I Pt \RA)% Ri PORI. upra

note 4. at para. 79."' WOODHOUSE REPORT. %Htpra note 6. at paras. 90-91 While sharing some of

these views, the Pearson Committee decided in fa\our of a mixed \ssten of statutor'

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In recommending an alternative system, the Woodhouse Committeewas guided by five basic principles: community responsibility, com-prehensive entitlement, periodic payments, complete rehabilitation andadministrative efficiency. It was claimed that modern society, whichbenefits from productive work of its citizens, must share the inevitableprice in bodily injury which results from community activities. Compen-sation must be available to all and should provide comfortable living bymaking up for loss of income and physical incapacity. The schemeshould promote physical and vocational recovery. Benefits must be paidpromptly and with minimum administrative costs. I I

Adopting this policy, the Act sets up three schemes which togetherprovide cover in respect of all personal injuries or death caused byaccident in New Zealand. 2 No other claims for damages, either atcommon law or under statute, can be brought in the New Zealand courts "for personal injury or death resulting from an accident in New Zealand.Each scheme is financed by a separate fund. The Earners Scheme'provides cover to all people who suffer personal injury by accident inNew Zealand' 5 and are employed or carry on business in New Zealand(irrespective of whether or not the accident has happened in the course ofthe work or employment). It is funded by a levy payable by employersand based on the amount of leviable earnings paid to employees.Self-employed people pay a prescribed percentage (at present one percent) of the amount of assessable income derived from the business.Persons who are injured in accidents caused by the use of motor vehiclesin New Zealand are covered by the Motor Vehicle Accident Scheme. ""The related fund is made up from contributions paid by motor vehicleowners and holders of driving licences. The third scheme, the

compensation and tort. They reasoned that tort remedies were better suited tocompensate for damages such as pain and suffering, loss of amenities and loss ofpromotion prospects. It was also thought that high income earners should be free topursue full reparation in tort, unrestricted by statutory limits on earning-relatedcompensation: I PEARSON REPORT, supra note 4, at ch. 11. For views opposing theno-fault concept, see Mackenzie, Some Reflections on Negligence, Damages andNo-Fault Compensation, 10 U. B.C. L. REV. 27 (1975).

" WOODHOUSE REPORT, supra note 6, at paras. 55-62.'2 There is one exception: persons who are not ordinarily resident in New Zealand

do not have cover under the Act while on board the ship or aircraft on which they come toNew Zealand, or are about to leave, and while embarking and disembarking: AccidentCompensation Act 1972, s. 102C, as amended by N.Z. 1978, no. 36, s. 7. Right ofaction in negligence against an air carrier is available under the Carriage by Air Act1967, Stat. N.Z. 1967, no. 151, s. 22. No similar action is available against a seacarrier.

" S. 5(1). The Act does not affect proceedings resulting from an accident that hasoccurred before April 1, 1974: s. 5(3)(c).

'4 Part III of the Act.In some cases the cover is extended to injuries by an accident outside New

Zealand. Such cover is given to New Zealand residents temporarily abroad for workpurposes during the first 12 months of their absence, and to New Zealand seamen andairmen and to members of the Armed Forces of New Zealand: ss. 60, 61 and 63.

6 Part IVofthe Act.

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Accident Compensation and the Foreign PlaintIff

Supplementary Scheme. ' 7 provides cover to all those persons who are notcovered by the other two schemes. It is financed from general taxation.

The administration of the schemes is vested in the AccidentCompensation Commission. established by the Act.", The Commission ischarged with the financial management of the compensation funds, theassessing of claims and the paying of compensation. It is required topromote general safety and rehabilitation of injured persons. Decisionsof the Commission may be appealed to an Appeal Authority and fromthere to the Administrative Division of the Supreme Court. '

This brief review of the policy and structure of the Act 20 is materialto the understanding of its international aspects which will be discussedin the following parts.

II. ENTITLEMENT OF VISITORS TO COMPENSATION

Visitors to New Zealand are issued, together with their entry forms,information about accident compensation. The), are told that if theysuffer personal injury by accident in New Zealand the) are entitled tono-fault compensation for certain losses: and that the law now prohibitsbringing action in New Zealand courts for personal injury or death byaccident occurring in New Zealand. It is doubtful whether most visitorsrealize that in a case of severe injuries their claim may be seriouslycompromised. The principal reason is that unless he or she actuallyworks in New Zealand. a visitor is not an "'earner'"1 (irrespective of hisactual earning outside New Zealand) and thus is not entitled to earningrelated compensation. It can be safely assumed that most v'isitors 22 arenot in New Zealand for work purposes. The definition of -earning"which entitles a person to earning related compensation 3 expresslyexcludes income derived from employment or work outside NewZealand.2 4 At the same time. a foreign earner has no common law rightsto sue in New Zealand for any part of his damages. Though seriousinjuries leading to permanent incapacity and consequential economiclosses are statistically rare. they raise the most tragic human problems.The predicament of an injured visitor left uncompensated for loss of

17 Part IV Aof the Act.18 S. 6.19 Ss. 155. 161. 168-69.20 For a full discussion. see Harris. ,qura note 2. and ACCIDIN I COMPINSATION

COMMISSION WELLINGTON. A BRIEF DESCRIPTION OI. 1iii A(C CIDI NI COMPENSATION

SCHEME OPERATING IN NEW ZEALAND (1976).21 See the definition of "earner*, "'employee" and *'self-employed person" in

s. 2(l). and the definition of 'bearnings" ins. 103.22 385.000 people visited New Zealand in the year ending 31 March 1976: NEW

ZEALAND GOVERNMENT YEARBOOK 834 (1977)."2 Under Part VI: Compensation. and particularly ss. 109(2). 112-13. 116-18 and

123.24 S. 103(3)(i.

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actual and future income is aggravated in proportion to the degree of hisincapacity and the level of his pre-accident earnings.

The Woodhouse Committee, though aware of the problem, swept itunder the carpet. They concluded that a visitor to a country takes it as hefinds it,2 5 and suggested that visitors should insure against the risk ofpersonal injury. In line with the general policy of the Act, entitlement toloss of earning compensation is in return for the individual's contributionto the New Zealand economy. Earners also pay for the right, eitherdirectly or through their employers. For these reasons the right ispreserved to non-residents who work, or are employed, in New Zealand.Abolition of common law rights, even in respect of non-compensablelosses, is consistent with total rejection of the tort process. It also reflectsthe practical difficulty of having to reintroduce some forms of liabilityinsurance, the need for which has been practically extinguished by theAct.

Nonetheless it is thought that the half-hearted protection of foreignearners is a blot on the Act. Cases of individual hardship cannot beignored merely because they do not fit neatly with the general scheme.The problem has obviously been treated as marginal and has escapedserious consideration.2 " The piecemeal manner in which the relevantstatutory provisions have evolved helped hide that the Act may constitutea pitfall to certain foreigners injured in New Zealand.2 7

25 WOODHOUSE REPORT, supra note 6. at para. 112. An opposite view wasexpressed in judicial dictum: -In personal injury cases it is not necessarily true that byentering a country you submit yourself to the special law of that country.- Chaplin v.Boys. [1971] A.C. 356, at 380, [19691 2 All E.R. 1085, at 1094 (H.L.) Even byWoodhouse's view, visitors can hardly be expected to accept stoically a law thatdeprives them of a universal right to recover for economic losses, providing noalternative.

" The Australian Compensation Committee, supra note 3. gave the matter a morethorough consideration. The position of visitors in Australia with no employment therewas considered under three alternatives: (i) Excluding them from the scheme and leavingthem to insure privately: (ii) To require or permit them to obtain protection on detinedterms and upon payment of levy: (iii) To include them automatically. The Committeeopted for the third alternative as producing the best result, and at acceptable costs. /d atpara. 363.

I PEARSON REPORT, supra note 4. at para. 1041, recommended that benefits tinderthe proposed no-fault scheme for motor vehicle injuries would be payable to tho,,injured in the United Kingdom while not habitually resident there as long as they ,lav Inthe United Kingdom.

27 As originally enacted the Act did not provide cover to non-residents unless theyhad employment in New Zealand or were injured in a motor accident. The original s. 5abolished all other actions only if the injured person had cover under the Act. TheAccident Compensation Amendment Act (No. 2) 1973. Stat. N.Z. 1973, no. 113,introduced the Supplementary Scheme, Part IV A. which made cover tunder the Actcomprehensive. At the same time, the amended s. 5 abolished all common law andstatutory rights (apart from under the Act) in respect of all injuries or death by accidentin New Zealand. The Act is the sole source of compensation. regardless of the e'tent ofthe benefits provided. Overseas breadwinners are thus the class of persons worstshort-changed by the Act for the loss of right of action for damages.

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Accident Compensation and the Foreign Plaintill

There are other reasons why compensation in lieu of action fordamages could cause financial loss to injured visitors. Some of these areshared by New Zealanders suffering similar losses. But foreigners areharder hit. New Zealanders. after all. share in the social benefitsprovided by the Act to the community as a whole. Some examples are:

1. A non-resident who works in New Zealand and is thereforeentitled to earning-related compensation has no claim for loss of incomederived in another country. This part of his earning is disregarded indetermining the amount of compensation due..2 1

2. Compensation for loss of earnings are paid periodically. Theirlevel may be increased by a specified percentage, reflecting themovement in earnings in New Zealand."" A person domiciled outsideNew Zealand may be better able to cope with the effect of local inflationby a proper investment of a lump sum settlement.

3. Compensation for loss of potential earning capacity payable toyoung persons who are training towards future occupation available onlyto persons who were at the time of the accident ordinarily resident in NewZealand."

4. Benefits payable under the Act are enmeshed with the socialsecurity scheme and the structure of the local health services. Under theSocial Security Act 1964, the New Zealand Government pays for mostmedical and hospital treatment in New Zealand. Such free treatment isnot available to persons with no ordinary residence in New Zealand."

Under the Act, the Commission has discretion to pay medical treatmentcosts which it considers reasonable by New Zealand standards and whichare not covered by the Social Security Act 1964." Costs are limited tomedical treatment given in New Zealand. Further medical or institutionalcare which a visitor may require after returning to his home country is notcovered.

5. A person domiciled outside New Zealand has no way of utilisingrehabilitation facilities provided by the Commission. :'

6. Lump sums payable for non-economic loss (which tire generallyavailable to injured foreigners under the Act) are subject to a ceiling. Themaximum aggregate sum payable for loss of limb or bodily function is7000 dollars."4 Compensation for pain. suffering and loss of amenities donot exceed 10,000 dollars.:" Periodical earning-related compensations

2 S. 104.:" S. 15(4).3 S. 118.31 Social Security Act 1964. Stat. N.Z. 1964. no 136. s 91:12 S. 111(1)." S. 48 requires the Commission to take all practical steps to promote a

programme for the medical and vocational rehabilitation of incapacitated persons shoare for the time bein2 in New Zealand. Such a programme is aimed tosard a speedyrestoration of the fullest possible physical. mental and social fitness and economicusefulness.

.14 S. 119.: S. 120.

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are based on the amount of the actual loss of earnings, subject to amaximum compensation of 240 dollars per week. " ; Promotion prospectsand expectation of increased earnings are not taken into account incalculating loss of earnings.

7. Non-residents are not covered while on board the ship or aircrafton which they come to, or about to leave, New Zealand, including theprocess of embarkation and disembarkation. 37

8. Some heads of damages recoverable at common law are notrecognised by the Act. 38

The financial losses that may ensue can be deduced from a briefcomparison with high damage awards in other common law countries.The total awarded in a recent British Columbia case 3 1 to survivingmembers of a family who were injured in the accident which caused thedeath of the husband and father was $1,543,000. The widow, ahousewife who at the age of 46 was rendered quadraplegic, was awarded$931,680: $45,000 for the capital cost of a new home, $693,620 for thecost of future care, $85,000 for pain and suffering and $107,550 for lossof financial support. In a recent Australian case4" the plaintiff, a 26 yearold fitter who was completely paralysed by the accident, was awarded atotal of $409,000. This sum included $161,000 for future care andmedical treatment and $77,000 for pain and suffering. In the UnitedStates, high awards for catastrophic injuries notoriously run into millions(greatly due to astronomic medical costs).

Comparable compensation under the Act would diminish these sumsconsiderably, notably in items of loss of earnings, loss of financialsupport, cost of long term medical care and damages for pain andsuffering. The problem is that, in principle, adequate protection offoreigners is incongruous in a context of a compensation scheme basedon community responsibility, financed from its resources and geared toits members' needs. 4 Unless the problem is fully appreciated someinjured non-residents stand to lose heavily by absence of common lawrights. Consequently they would have strong financial incentive to bringan action in another country. The implications of such litigation areconsidered later in this article.

" S. 113,asamendedb vStat. N.Z. 1978, no. 36, s. 8.

17 S. 102C. as amended b' Stat. N.Z. 1978, no. 36, s. 7.

.1 Certain instances are specifically excluded: s. 121. For a comparison ofcommon law damages and compensation under the Act, see Willy, The AccidentCompensation Act and Recovery for Losses Arising from Personal Injury and Death byAccident, 6 N.Z. U.L.J. 250 (1975).

11 Tonka v. Bjornson, (S.C.B.C. May 17, 1979). A marked increase in amountsof compensation awarded for personal injury is recorded in recent decisions of theSupreme Court of Canada: Thornton v. Board of School Trustees of School District No.57 (Prince George), [1978] 2 S.C.R. 267, 19 N.R. 552 (general damages $810,000);Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229, [19781 1 W.W.R. 577($740,000); Arnold v. Teno, [1978] 2 S.C.R. 287, 19 N.R. 1 (total award $540,000).

" Hall v. Tarlinton, 19 A.L.R. 501 (F.C. Aust. 1978). New Zealand andAustralian dollars are roughly at par.

" "New Zealand is an egalitarian society, with a fairly narrow range of incomes,

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Accident Compensation and the Foreign Plaintiff

III. STATUTORY COMPENSATION AND THE RULE INPHILLIPS I" E)'RE

A. Actions in New Zealand in Respect of Accidents Abroad

In some circumstances a person injured abroad may choose NewZealand as the convenient forum. This would be a logical choice if thedefendant wrongdoer resides and has his assets in New Zealand, or if afaulty product is exported from New Zealand causing injury abroad.What is the legal position? Section 5(1) of the Act provides:

[W]here any person suffers personal injury by accident in New Zealand ordies as a result of personal injury so suffered .... no proceedings fordamages arising directly or indirectly out of the injury or death shall bebrought in any Court in New Zealand independently of this Act.

It seems fairly clear that the Act has no direct application to accidentsoccurring outside New Zealand.4 2 The plaintiff has no cover under theAct and, concomitantly, has not lost his common law rights.

Difficulties may be caused by the basic tort choice-of-law ruleapplying in Anglo-Commonwealth jurisdictions. The well known rule inPhillips v. Evre43 requires "actionability" 44 under the law both of theforum and of the place of the wrong. In effect the rule dictates theapplication of the lexfori, subject to defences available in the lex locidelicti. The requirement that the act complained of constitute a tort ifcommitted in the forum's country raises doubt as to actionability in New

which has made it easier for Parliament to fix a ceiling for earning-related compensationunder the new scheme." Harris, supra note 2. at 362.

42 This is subject to a limited number of specific exceptions. -upra note 15.43 As a general rule. in order to found a suit in England for a wrong alleged to

have been committed abroad, two conditions must be fulfilled. First, thewrong must be of such a character that it would have been actionable ifcommitted in England .

Secondly. the act must not have been justifiable by the la%% of the placewhere it was done.

L.R. 6Q.B. I, at 28-29, 40 L.J. Q.B. 28, at 40 (Exch. Ch. 1870).Phillips v. Eyre is followed in Canada: O'Connor v. Wray, 119301 S.C.R. 231.

[193012 D.L.R. 899: Canadian Nat'l. S.Ss. Co. v. Watson 11939) S.C.R. 11, [193911D.L.R. 273 (1938). See also J. CASTEL. CONFLICT OI- LAx\S: CASES. NoTEs ANDMATERIALS (4th ed. 1978): in Australia: Koop \. Bepp. 84 C.L.R. 629 (H.C Aust.1951): Anderson v. Eric Anderson Radio & T.V. Pty. Ltd.. 114 C.L.R. 20 (H.C. Aust.1965): and in New Zealand: Richards v. McLean. [197311 N.Z. L.R. 521 (S.C. 1972).

11 In Chaplin v. Boys, supra note 25. at 389. [19691 2 All E.R. at 1102, LordWilberforce stated the "double actionability" test:

I would, therefore, restate the basic rule of English law with regard to foreigntorts as requiring actionability as a tort according to English law, subject tothe condition that civil liability in respect of the relevant claim exists asbetween the actual parties under the law of the foreign countr) where the actwas done.

Although the diversity of opinion in the five speeches makes it difficult to pinpoint theratio of the case, there is a majority support (Lords Wilberforce, Hodson and Guest) forthis proposition.

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Zealand, where personal injury entitles the victim to claim compensationfrom the Commission, leaving him no right of action against thewrongdoer. But since section 5(1) expressly defines its geographicalambit, it must be interpreted as restricted to accidents which haveactually happened in New Zealand. The hypothesis created by Phillips v.Evre predicated on an accident abroad is thus excluded.' Thisconclusion is supported by the basic policy of the Act. A foreign plaintiffhas no cover, therefore his right to action in tort is not affected.

Though the Act has no direct application, the New Zealand courtwould still face a formidable problem. Provided that civil liability existsin the place of the accident, New Zealand law governs issues such asstandard of liability, contributory negligence, status to sue, measure ofdamages and available defences. Such incidents are governed by ruleswhich, in respect of domestic accidents, have been abolished. Toappreciate the problem one must briefly recall the rationale for theapplication of the lexfori in foreign tort cases. Historically it is explainedby the proximity that once existed between tortious and criminalliability.4 6 Systematic displacement of the forum's own law in casesinvolving foreign elements faces a sterner opposition, based on theconcept of territorial sovereignty, in cases involving "wrongs". In thesimplest terms, application of the lex fori in such cases (subject tothreshold requirements arising from the lex loci delicti) enables the court"to give judgment according to its own ideas of justice" .17 The role ofthe lexfori in conflict cases was explained in America by Professor Cookin the following terms:

[Tlhe forum, when confronted by a case involving foreign elements, alwaysapplies its own law to the case, but in doing so adopts and enforces as its ownlaw a rule of decision identical, or at least highly similar though not identicalin scope with a rule of decision found in another state or country with whichsome or all of the foreign elements are connected. . . . The forum thusenforces not a foreign right but a right created by its own law. "

Strictly speaking, New Zealand law has exempted personal injuriessuffered abroad from the change brought about domestically by the Act.But since a major area of tort law has been radically excised andreplaced, it is difficult to see how a New Zealand court will beimplementing its own concept of justice by employing rejected rules tosimilar issues arising out of an accident abroad. Such a course mayproduce absurd results. Assume, for example, that an accident happensin country X in which a local resident is negligently killed by a visitorfrom New Zealand. Country X has a wrongful death recoveries statute.The action, brought by the deceased's legal representatives in New

' But see Zussino v. Zussino, 71 N.S.W. St. R. 24 (C.A. 1969).See Kahn-Freund, supra note 1, at 20-22.

17 Chaplin N. Boys, supra note 25. at 400, [19691 2 All E.R. at Ill1 (LordPearson).

" W. COOK, THE LOGICAL AND LEGAL BASES OF THE CONFLICT OF LAws 20-21(1942).

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Zealand, raises the question of the plaintiffs' right to sue as dependents.New Zealand's wrongful death statute4"' has survived the Act mainlybecause it still applies in proceedings arising out of accidents whichhappened prior to the Act coming into force. ' " Presumably. it will berepealed once the limitation period for such proceedings has expired. Inthis situation the New Zealand court would have to resort to old commonlaw principles, long discarded everywhere, which gave no right of actionfor damages in respect of a person's death.

The fundamental differences in the theories underlying the Act andconventional tort systems make it impossible to harmonize New Zealandlaw with material foreign tort rules. Application of 'exiled" h,.x fiori,contrasting with current ordinary norms. may help to preserve thedoctrinal validity of Philips v. Evre but would go against its intrinsiclogic. This process is backward looking. drawing on frozen rules nolonger subject to statutory reform and common law development.

The problem. if realized, can largely be alleviated by properjurisdiction rules. New Zealand courts should be given power to declineto exercise jurisdiction in foreign accident cases unless they are satisfiedthat such refusal would work injustice. New Zealand, having nocomparable domestic rules which may be extended to the case, should bepresumed forum non con'eniens. If the case may be brought within thejurisdiction of a foreign court, the plaintiff should be referred there.

The odd case may still raise a choice-of-law problem. If jurisdictionby inertia is to be avoided it should be realized that the metamorphosis of'New Zealand tort law justifies a new approach to foreign torts problems.The opportunity may be grasped to shake off the shackles of Phillip- i.Evre in favour of a more flexible rule. better suited to new conditions."t

The "proper law of the tort' theory,.52 now prevailing in the UnitedStates. is the obvious alternative.

B. Actions Abroad in Respect ol Act idcnts in .Vew Zealand

A person injured while on a visit to New Zealand may prefer to -Suein another country. where he stands a chance to reco\ era higher damages

" Deaths by Accident Compensation Act 1952. Stat. N.Z 1952. no 35-,cording to the Accident Compensation \t 1972. Stat N Z 1975. 2-1409. % 184.right of action is now subject to s. 5 of'this \ct

S. 5(t).New Zealand courts are bound b\ I'ri'. Council decisions There is sufficient

such authority to support the application of Phillips \. E\ re c t: . Walpole \ CanadianN. Ry.. [19231 A.C. 113. 70 DL.R. 201 l' C 1922). C P.R. Parent. 119171 A C.195. 33 D.L.R. 12 (P.C.). Substantial change in local conditions. ho%%e'er, w ouldjustify a departure from an established rule.

'- On the "'proper law'' theor\. wt 1P 427 iiir a "State interest tntl\%is" IliaN ofcourse indicate that New' Zealand lam\ should appl, A most oh\ ious casc " ould be one\\here both parties are resident in Nev' Zealand and the accidents happened \ hile the\\'vere on a trip abroad. In such case there seems, to be no escape from apply ing defunctNe\\ Zealand rules despite the criticism made in the text

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award. As explained above, the incentive would be particularly strong ina case of fatal or severe injuries suffered by a non-resident who had notbeen employed in New Zealand. In practice the action would usually beinstigated in the country of the plaintiff's domicile if the defendant couldbe brought within the territorial jurisdiction of the local court: forexample, a multinational corporate defendant conducting business there.If Phillips v. E vre is followed, such action would face a defence based onthe second part of the rule. Can the cause of an accident permitting theplaintiff to claim statutory compensation as sole remedy be characterizedas "non justifiable" by New Zealand law? The main authorities are thetwin cases Walpole v. Canadian Northern Railway5' 3 and McMillan v.Canadian Northern Railway.5 4 In Walpole the Saskatchewan courtsdismissed an action for damages following a fatal work accident inBritish Columbia on the ground that the Workmen's Compensation Actof British Columbia permitted the plaintiffs to recover compensation,barring further action in tort. The Privy Council affirmed the decision,holding that the negligence of the defendant company was not actionablein British Columbia, therefore not "non justifiable" in the terms ofPhillips v. Eyre.5

- The decision is undoubtedly correct since the deceasedwas employed, and resided with his family in British Columbia. Onlyafter the accident did the widow move to Saskatchewan where the actionwas brought. But nothing in the decision turned on these facts. UnderPhillips v. Eyre the only relevant consideration was "justifiability" bythe law of the place of the accident.5 6 Two questions arise: Is it logical tosay that a negligent act is not unjustifiable because it only gives right tostatutory compensation? And, is it always right to allow a compensationstatute barring a tort action to have control regardless of the foreignelements? To illustrate the problem, let us consider two examples.

Case A. Two English seamen, while their vessel is unloading at aNew Zealand port, decide to take a ride in town in a hired car. Theplaintiff is injured through the negligent driving of the defendant. Anaction in negligence is consequently brought in England.

New Zealand law gives the plaintiff compensation as sole remedy.Following Walpole and McMillan the negligent driving is not "unjustifi-able"; it does not create civil liability57 in New Zealand. But thesedecisions must now be considered in the light of the House of Lords

53 Supra note 51.54 [1923] A.C. 120, 70D.L.R. 229(P.C. 1922).

Supra note 43."6 In different circumstances this reasoning may lead to questionable results. For

example, in Ward v. British Am. Oil Co., [1923] 1 W.W.R. 1240, 16 Sask. L.R. 526(K.B.), the Saskatchewan court, following McMillan, supra note 54, held that theAlberta compensation statute which made compensation in Alberta an exclusive remedybarred a tort action in Saskatchewan, although the injured workman resided inSaskatchewan, was employed there, and the accident occurred on an occasional worktrip to Alberta.

57 In Machado v. Fontes, [1897] 2 Q.B. 231, 66 L.J.Q.B. 542 (C.A.), acontroversial decision, it was held that the act committed abroad had to be merely

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decision in Chaplin v. Boys5' where the facts were practically similar tothose in our case. The House of Lords. while affirming Phillips v. Evre inprinciple, allowed an exception based on the special circumstances.Since both parties were English and their stay in Malta. the place of theaccident, was temporary, the English Court awarded damages for painand suffering recoverable in English law but denied by Maltese law.Would this flexibility be extended to our case'? In other words, would anEnglish court be influenced by the domicile of the parties, theirantecedent relationship and the fleeting connection with New Zealand soas to depart from the Walpole decision? This is by no means certain. Twoof the Lords in Chaplin v. Boys (Lords Donovan and Guest) appliedEnglish law because they considered the damages issue procedural orremedial. therefore subject to the lex fori. Lord Hodson was prepared toqualify the general rule in the interests of justice 'in such a case wherecivil liability exists [or existed] in the foreign country though not exactlycorresponding to the civil liability in this country.. ." In the absenceof such liability, the question seems to have remained open.

If both parties were domiciled in a Canadian province and the actionwas brought in that province, the plaintiff might have been assisted byrelying on Machado v. Fontes 6o if it could be proved that the defendanthad committed a punishable offence in New Zealand. In a series of casesleading to the Supreme Court of Canada decision in McLean v.Pettigrew,6 Canadian courts have utilised the extension provided by thecase of Machado v. Fontes to overcome an immunity granted by the lawof the accident's place. In Story v. Stratford Mill Building Co." ' theOntario Court of Appeal entertained an action in tort by an Ontarioworkman against his employer, an Ontario company. The accidenthappened in Quebec where no damages could be recovered from theemployer, the only remedy being compensations given by the Quebecstatute. The court relied, inter alia. on Machado v. Fontes 3 even thoughthere was no evidence that the negligence was criminal in Quebec. Itwas, apparently, sufficient that the act was considered not -innocent".

Machado v. Fontes has been widely criticized. It is indeed highlyillogical to hinge a tort choice on the incidence of criminal liability.

wrongful. creating criminal liability, and not necessarily actionable in civil proceedingsto satisfy the Phillips v. Eyre rule. In Chaplin v. Boys. supra note 44. three of the fiveLords (Wilberforce. Hodson and Guest) overruled Machado v. Fontes. restating Phillipsv. Eyre as a double actionability test.

" Supra note 25.I ld. at 379. [196912 All E.R. at 1093. Lord Wilberforce. on the other hand, was

of the opinion that the rule must be made flexible enough to take account of varyinginterests and policy considerations with respect to the particular issue.

60 Supra note 57.61 [1945] S.C.R. 62. [1945] 2 D.L.R. 65 (1944). See Hancock. Canadian-

American Torts in the Conflict of Laws: The Revival of Polhcy-Determitted ConstructionAnalysis. 46 CAN. B. REV. 226. at 239-44 (1968).

62 30 O.L.R. 271. 18 D.L.R. 309 (C.A. 1913). This case should be contrastedwith Ward v. British Am. Oil Co.. supra note 56.

63 Id. at 286. 18 D.L.R. at 320.

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Moreover, an indiscriminate application may lead to absurd results,diverting attention from the real issue - the substantive connection ofthe competing rules with the parties and the event. Yet in our case,application of Machado v. Fontes may be necessary to reach a just result,just as it was in McLean v. Pettigrew. It would be unfair to allow, forexample, an Alberta resident to escape liability for wrongful injuryinflicted on another Alberta resident in New Zealand merely becauseNew Zealand law has eliminated civil liability for personal injuries."Finally, in view of Chaplin v. Boys there is doubt as to the fate ofMachado v. Fontes in Canada when the matter comes next for seriousconsideration.6 5

Case B. The facts are as in Case A, only this time the cause of theaccident is the negligence of the car rental firm, a New Zealandcompany. The injured English seaman has not hired the car but wasmerely a passenger.6

In this situation it is very probable that the absence of civil liabilityin New Zealand would be crucial in proceedings in England. Dicta inChaplin v. Boys 67 suggest that the requirement of actionability in the hl.rloci would not be qualified where the defendant is domiciled there.Canadian courts (assuming that the plaintiff is domiciled in Canada) mayagain resort to Machado v. Fontes - this time with less functionaljustification than in the previous case. Professor Hancock"8 argued that incases like Howells v. Wilson" ' and McLean v. Pettigrew the courts, whilenominally adhering to the traditional rules, in fact proceeded by aninterpretation of the material rules in light of their respective policies andthe relationship to the parties. If this is indeed the basis of the judgments,then the different domiciles of the plaintiff and the defendant must have amajor influence on the choice-of-law considerations.

The discussion above is designed to show that the traditionalAnglo-Canadian rules are inadequate as a choice formula in conflicts ofthis type. Consideration of the parties' domicile, their antecedent

"4 See the criticism of Machado v. Fontes in Lieff v. Palmer, 63 Que. B.R. 278(1937) in which both parties were domiciled in Ontario, where the accident occurred.The action was brought in Quebec, apparently to avoid the effect of the Ontario gueststatute. In the Walpole case, supra note 51, at 119, 70 D.L.R. at 205, it was noted thatno criminal negligence was proved at trial. What would have been the result had suchevidence been furnished?

I In two recent Australian cases, Machado v. Fontes was held to be no longergood law: Warren v. Warren, [1972] St. R. Qd. (S.C.); Corcoran v. Corcoran. [19741V.R. 164(S.C. 1973).

66 The last fact was added to eliminate a possibility of a contractual action. Itshould be noticed, however, that a contractual action based on similar facts wouldprobably fail since New Zealand law is likely to be the proper law of the contract. S. 5( I)of the Act prohibits damages in respect of personal injuries, irrespective of the cause ofaction.

67 Supra note 25. at 379 (Lord Hodson), 392 (Lord Wilberforce), [19691 2 AllE.R. at 1093, 1104.

68 Supra note 61.69 Que. B.R. 32 (1936).

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relationship and the respective policies of the le.x firi and the h'. loItshould make the result in Case A beyond doubt, while Ca.se B wouldpresent a dilemma. Not only does the traditional rule turn a blind eye tothese considerations (which is ground for a well known broadercriticism), but it is analytically unsuitable to deal with the problem. Thecentrepiece of the Phillips v. Evre rule is the concept of "fault": the actmust be wrongful in both the lexfiri and the lea loci to allow the forum toproceed. This demand is meaningless in the context of a compensationsystem which has replaced delictual liability by community responsibil-ity. The no-fault theory disalignes the double-barrelled test. To askwhether the act is actionable in New Zealand is to ask the wrongquestion. A similar point was made in the McAiilan case:

The liability thus created is not to pay damages for a %%rongful act, butcompensation for an accident. The right to compensation is founded onaccident simply. not on negligence or any other actionable wrongThe mere fact that the employer is liable to pay compensation for such anaccident does not. in my opinion, attach any character of wrongfulness orunjustifiableness or guilt (as opposed to innocence) to the ae t upon which anaction in this Province. founded entirely on tort. can be supported. The gist ofthe action is negligence, the ground for compensation is the accident."0

The passage explains why compensations ex legi. do not. per m, affectthe "innocent" nature of the act. But it may well support the broaderconclusion that the whole question of civil liability is made irrelevant.

If. indeed, a tort/compensation conflict is one of a special nature,how should it be treated? An alternative method to be considered is theone adopted in the United States. discussed in the following part.

IV. THE UNITED STATES EXP.RIENCE - THE WORKMEN'S

COMPENSATION ANALOGY

What law would an American court apply in a personal injury actionof a non-resident injured in New Zealand'? Current rules in the UnitedStates are collectively referred to as "'the proper law of the tort"doctrine."' They are summarized in the Restatement of the Conllict ofLaws (Second)' 2 as follows:

7o Supra note 54. at 124-25. 70 D.L.R. at 232. citing the Saskatchevuan Court ofAppeal.

71 The doctrine came into prominence with the Nev. York Court of Appeals'

decisions in Kilberg v. Northeast Airlines. Inc.. 9 N.Y. 2d 34, 211 N.Y S 2d 133(1961): Babcock v. Jackson. 12 N.Y. 2d 473. 240 N.Y S. 2d 743 t1963) Perforce. it isdealt with here briefly and selectixely. For a fuller discussion and a current ealuation.see Nygh. Some Thoughts on the Proper Lao of a Tort. 26 INT. & CoIi. L.Q 932(1977): Couch. In Search of Justice: Tort% Conflu ts ol Lais . 61 NIARQ, L. Ri- 545(1978): and Lown. A Proper Law ol Torts in the Conlhct ol Lats %. 12 At TA L. Ri\. 101(1974).

72 AMERICAN LAW INSTITUTE. I RESTATEMIENT (SEC OND) OF CON'I ICT OF L.sss414(1971).

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S.145 The General Principle(1) The rights and liabilities of the parties with respect to an issue in tort

are determined by the local law of the state which, with respect to thatissue, has the most significant relationship to the occurrence and theparties ...

(2) Contacts to be taken into account in applying the principles of S.6 todetermine the law applicable to an issue include:(a) the place where the injury occurred,(b) the place where the conduct causing the injury occurred,(c) the domicil, residence, nationality, place of incorporation andplace of business of the parties, and(d) the place where the relationship, if any, between the parties iscentered.

These contacts are to be evaluated according to their relative importance withrespect to the particular issue.

Where the territorial base of Phillips v. Eyre leads to a choice ofjurisdiction, the proper law approach seeks, through a variety ofcontacts, to establish the legal rule applicable to each tort issue. Theforum, as such, plays a neutral part unless the applicable foreign ruleconflicts with its public policy. At the present stage the doctrine hasevolved beyond the mere counting of factual contacts towards "stateinterest analysis". This process evaluates each rule by reference to itsunderlying policy in relation to the particular issue before the court. Theapplicable law is that of the state with the most interest in the outcome.13

In some circumstances the proper law approach provides a relativelyeasy solution to the problems presented by an accident in New Zealandand litigation abroad. If, for example, both plaintiff and defendant arenon-residents in New Zealand, New Zealand has no interest in applyingits law. It is not concerned with either the welfare of the plaintiff or theimmunity of the defendant. Thus, if a New York resident is injured by afellow New Yorker while both are on a short visit to New Zealand, theNew York court would be justified in applying New York law, though nosimilar action in negligence lies in New Zealand. 74 The policy of the Actis not frustrated, while New York has a vital interest in distributing theloss between persons whose home is in New York. In "state interestanalysis" parlance, such a situation raises a "false" conflict. Thismeans that an analysis of the policies behind the competing lawsindicates that only one state has an interest that its law should apply whilethe application of other states' law would not further these policies.

By contrast, a "true" conflict 75 situation demands a tough choice.Consider, for example, a case where the defendant is a New Zealand

73 For a good illustration of state interest analysis, see Reich v. Purcell, 63 Cal.Rptr. 31,432 P. 2d 727 (1967). The case is a subject of a symposium in 15 U.C.L.A. L.REv. 551 (1968).

71 Compare with Babcock v. Jackson, supra note 71.75 The dichotomy false-true conflicts was criticized in Hunker v. Royal Indemnity

Co., 57 Wis. 2d 588, 204 N.W. 2d 897 (1973). It was pointed out that even if State A'sinterests far outweigh those of State B, the latter still has some concern which forces amethodical choice.

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corporation and the plaintiff is a New Yorker, employed by a head-officein New York. While on a short inspection trip in New Zealand he isinjured by the alleged negligence of the local corporation. New York hasa primary interest in the proper recovery of the plaintiff on a common lawbasis. New Zealand law has an interest in seeing that its resident does notincur financial liability in respect of personal injury suffered in NewZealand. It is with this situation, which is the one more likely to occur,that we are mostly concerned.

A ready analogy is provided by conflicts involving application offoreign workmen's compensation statutes. Legislation replacing, inessence, common law rights with compensation for industrial injuriesnow exists in all of the United States. Though restricted to employmentrelationships, it shares the general philosophy of the Act: to substitute thedoubtful common law process with a remedy which is both expeditiousand independent of proof of fault, and at the same time to provide for theemployer a liability which is limited and determinable. The statutesdiffer in coverage and scope of protection. Some, but not others, makecompensation the sole means of recovery against parties other than theimmediate employer, such as a general contractor or a commonemployee. An injured workman, entitled to compensation as an exclusiveremedy in State A, may attempt to sue for additional damages in State Bwhose local law does not bar his action. Choice of law problems in suchcases are dealt with in the Restatement76 by a separate rule:

S. 184 Abolition of Right of Action for Tort or Wrongful DeathRecovery for tort or wrongful death will not be permitted in any state itf thedefendant is declared immune from such liability by the workmen'scompensation statute of a state under which the defendant is required toprovide insurance against the particular risk and under which(a) the plaintiff has obtained an award for injury, or(b) the plaintiff could obtain an award for the injury, if this is the state ( Iwhere the injury occurred, or (2) where employment is principally located.or (3) where the employer supervised the employee's activities from a placeof business in the state, or (4) whose local law governs the contract ofemployment....

The cases cited in the Restatement show a preference for a compensationstatute barring a tort action whenever its benefits are available to theinjured workman, regardless of material multi-state contacts. Thus inUtica Mutual Insurance Co. v. Potomac Iron I'orks., Inc.77 the plaintiff,a sub-contractor's employee, brought action in tort in the District ofColumbia against the general contractor and a fellow employee. Theplaintiff was a resident of Maryland who was employed in D.C. by alocal corporation. Both defendants were Virginia corporations and the

The terminological difficulty may perhaps be resolved by substituting "a'oida-ble" and 'inevitable" for "false" and "true" conflicts, respectively. The distinction isuseful as it helps to concentrate on the problems arising when the interests behind theconflicting rules are evenly balanced.

76 Supra note 72. at 546.7i 300 F. 2d 733 (D.C. Cir. 1962).

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accident happened while the plaintiff was working on a construction sitein Virginia. The plaintiff collected compensation in D.C. and his tortaction against the defendants was permitted by the D.C. statute. By thelaw of Virginia the plaintiff's sole and exclusive remedy against ageneral contractor and a fellow employee were compensations providedby the Virginia statute. Ignoring all other contacts, the United StatesCourt of Appeal in the District of Columbia affirmed a pre-trial order todismiss the action on the ground that a tort action brought in respect of anaccident in Virginia was governed by the law of Virginia.

Williamson v. Weyerhaeuser Timber Co. 78 involved a tort action inOregon. The plaintiff deceased resided in Oregon and was employedthere by an Oregon firm. He was sent to do repair work for a Washingtoncustomer in Washington where the fatal accident happened. The OregonCompensation Statute permitted an election of a tort action against a thirdparty whereas the Washington statute entitled the plaintiff to claimcompensation in Washington, exempting the defendant from any furtherliability. It was held that the law of Washington, being the law of thestate of the accident, prevailed, and that the plaintiff could not sue forcommon law damages in Oregon.

These cases, and many others, 79 can be explained as a straightfor-ward application of the law of the place of the wrong:80 the choice rulewhich prevailed in the United States at that time. But in the leading caseof Wilson v. Faull, 81 the rule was explained as based on broad policyconsiderations:

Choice of law in the situation presented here should not be governed bywholly fortuitous circumstances such as where the injury occurred, or wherethe contract of employment was executed, or where the parties resided ormaintained their places of business, or any combination of these "contacts'".Rather, it should be founded on broader considerations of basic compensationpolicy which the conflicting laws call into play, with a view toward achievinga certainty of result and effecting fairness between the parties within theframework of that policy. The injured workman has a prompt and practicalcompensation remedy in any state having a legitimate interest in his welfare.The person who provides that compensation in an interested state has adefinitive liability which is predictable with some degree of accuracy and isgranted an immunity from an employee's suit for damages which does notdisappear whenever his enterprise chances to cross state lines and the suit isbrought in another state.8 2

78 221 F. 2d 5 (9th Cir. 1955).79 E.g., Tucker v. Texas Co., 203 F. 2d 918 (5th Cir. 1953); Knott v. Red Star

Transit, Inc., 200 F. Supp. 203 (E.D. Mich. 1961). For a collection of the older cases,see Dwan, Workmen's Compensation and the Conflict of Laws, II MINN. L. REV. 329(1927), and Dwan, Workmen's Compensation and the Conflict of Laws-the Restatementand other Recent Developments, 20 MINN. L. REV. 19 (1935).

'0 Language to that effect is indeed common in the judgments. See, e.g., UticaMutual Ins. Co. v. Potomac Iron Works, Inc., supra note 77, at 734, and Williamson v.Weyerhaeuser Timber Co., supra note 78, at 11.

81 27 N.J. 105, 141 A. 2d768 (1958).82 Id. at 114, 141 A. 2d at 778-79.

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Wilson v. Faull itself is a striking illustration. The defendant generalcontractor, the subcontractor (employer) and the employee plaintiff alllived in New Jersey. While the injury occurred on a project inPennsylvania, the contracts between the general contractor and subcon-tractor, and the latter and the plaintiff, were executed in New Jersey.Under the Pennsylvania statute a suit against the general contractor couldnot be maintained, but such a suit was permitted by New Jersey law. TheSuperior Court of New Jersey. Appellate Division, held that theemployment relationships were the most important element and allowedan action in tort for damages. : The decision was reversed by the NewJersey Supreme Court for the reasons just quoted.

United States courts are clearly sympathetic to compensationlegislation of sister states. They feel that a uniform application of thislegislation maintains the quid pro quo policy of workmen's compensa-tion. But the foregoing analysis misses an important point: compensationprovided by one state may not constitute adequate recovery for an injuredworkman domiciled in another state."' It is interesting that by 1971, theyear of the Restatement Second. the impact of the proper law doctrinehad not yet reached the workmen's compensation area. This approachwould define two distinct issues: the plaintiff's right to bring a tortaction, and the immunity granted to the defendant. Each issue must berelated to the law having the greatest policy interest in the result. Thusthe law of the plaintiff's domicile and the law of the place of employmentshould be considered, as well as the law of the defendant's domicile andthat of the place of the accident. If. on this basis, it is found that theissues are subject to conflicting rules, the forum may apply its own law,on public policy grounds. to resolve the impasse. By this method. Wilsonv. Faull was wrongly decided. The common residence of the parties aswell as the place of employment were all in New Jersey. New Jersey hadan interest in settling the claims on a full tort basis while Pennsylvania,with only a minimal interest. was not affected. It was. therefore, a falseconflict in which New Jersey law should have prevailed.

Some recent multi-state compensation cases did apply governmentalinterest analysis. 85 Of these. the most important is the 1978 United StatesCourt of Appeals (Second Circuit) decision in O''onnor v. Lee-H'

" Wilson v. Faull. 45 N.J. Super. 555. 133 A. 2d 695 (Super Ct App. Di%-1957).

" Presumably it is thought that differences in compensations recoxerable in sisterstates of the same federation cannot be that significant. But the fact that the plaintiffresorted to the lengthy and costly common law process rather than be satisfied withcompensation indicates the financial advantage of the former course. It would also benoted that U.S. courts proceeded along similar lines when dealing with compensationlaws of foreign countries: Beyer v. Hamburg-American S.S. Co.. 171 F 582 (C.C. S.D.N.Y. 1909): Schweitzer v. Hamburg-Amerikanische Packetfahrt Actien Giesellschaft.78 Misc. Rep. 448. 138 N.Y.S. 944 (Sup. Ct. 1912): The Falco. 15 F. 2d 604 (E.D.N.Y. 1926).

" Davis v. Morrison-Knudsen Co.. 289 F. Supp. 835 (D. Or. 1968). Hunker v.Royal Indemnity Co.. supra note 75.

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Paving Corp.86 This was an action in New York, following the wrongfuldeath of D. O'Connor, brought by his estate. O'Connor was a New Yorkresident employed by a New York firm. His duties included occasionaltrips to a construction project in Virginia, during one of which he waskilled. The defendants were a Virginia corporation and its employee,both with no contacts with New York. The choice of law question pittedthe Virginia statute, with compensation as sole remedy, against NewYork's Workmen's Compensation Law by which the plaintiff was notbarred from suing the defendants for wrongful death caused by theirnegligence.

The defendants asserted that the Virginia contacts far outweighedNew York's. Relying on the Restatement they argued that New York'sinterests in seeing that O'Connor's representatives received adequatecompensations for his death had to be harmonized with the policy oflimiting the costs imposed on employers by industrial accidents, whichwould dictate following Virginia law. The plaintiff based his case on theNew York contacts. The court87 referred to a line of decisions of the NewYork Court of Appeals which has established that court's "determinationto afford New York tort plaintiffs the benefit of New York law morefavourable than the law of the lex loci delictits whenever there [was] afair basis for doing so"." 8 It then concluded:

Here the basis for applying the more favourable New York law ratherthan the law of the lex loci to O'Connor is at least as great as in the casescited. Appellants have failed to furnish us with persuasive reasons to believe

86 579 F. 2d 194 (2d Cir. 1978).17 A federal court in New York faced with a choice problem must determine what

law a New York court seized of the action would apply: Klaxon Co. v. Stentor Elec.Mfg. Co., 313 U.S. 487, 85 L. Ed. 1477 (1941).

88 O'Connor v. Lee-Hy Paving Corp., supra note 86, at 205. The line of casesincludes:

Kilberg %,. Northeast Airlines, 9 N.Y. 2d 34, 211 N.Y.S. 2d 133, 172 N.E.2d 526 (1961) (refusing to give effect to Massachusetts ceiling on recoveryfor wrongful death of New York resident in Massachusetts airplane crash);Babcock v. Jackson, .. . 12 N.Y. 2d 473, 240 N.Y.S. 2d 743, 191 N.E. 2d279 (refusing to apply guest statue of Ontario, where accident occurred, todefeat claim of New York passenger); Macey v. Rozbicki, 18 N.Y. 2d 289,274 N.Y.S. 2d 591, 221 N.E. 2d 380 (1966) (refusing to apply Ontario gueststatute against New York plaintiff even though she was staying at herrelatives' home in Canada and trip began and was to end there); Miller v.Miller, 22 N.Y. 2d 12, 290 N.Y.S. 2d 734, 237 N.E. 2d 877 (1968) (refusingto apply Maine limitation on recovery in wrongful death action where a NewYork resident was killed while in a motor vehicle operated by his brother andowned by his sister-in-law who were Maine residents); Tooker v. Lopez, 24N.Y. 2d 569, 301 N.Y.S. 2d 519, 249 N.E. 2d 394 (1969) (refusing to applyMichigan guest statute to accident in Michigan involving New Yorkpassenger).

Id. (footnotes omitted) Another was Rosenthal v. Warren, 475 F. 2d 438 (2d Cir. 1973),(refusing to apply Massachusetts death recovery limitations although the allegedmalpractice was committed in a Massachusetts hospital, by a local surgeon, causing thedeath of a New York resident).

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that. if confronted with the problem here presented. the Ne%% York Court ofAppeals would turn away from the path it has consistently followed sinceKilberg and subject a New York resident, employed in New York by a Ne"York employer and based in New York. to Virginia law which prevents himor his estate from suing for negligence a non-employer alleged to havenegligently injured or killed him at the worksite. "

The reasoning does little more than call the shots and has yet to be testedin other states' courts. " But the principle thus gleaned from theauthorities is an important innovation in the workmen's compensationarea. As a departure from the Restatement's rule, the jurisdiction that hasspawned the proper law doctrine had brought compensation conflicts intothe doctrine's fold.

Let us return now to the problems created by an accidental injury inNew Zealand. Assume that the plaintiff, a tourist domiciled in StateX, isinjured in a road accident through the negligent driving of the defendant,an unrelated New Zealand citizen. There are two choices of law optionsin an action brought in State X.

1. Apply New Zealand law whereby a tort action is barred bysection 5(1) of the Act. The New Zealand connections are the residenceof the defendant and the place of the accident. They therefore outnumberthe interest of State X, the plaintiff's domicile. The defendant hascontributed to the compensation scheme and has acquired an immunity inreturn for the plaintiffs rights to no-fault compensations. New Zealandhas a vital interest in seeing that the defendant is not subjected to a tortliability. Upholding this concern would further basic conflicts objectives:certainty, predictability of results, amicable international relationshipsand promotion of the international order.

Such a choice is buttressed by the 'principled preference approach"formulated by Professor Cavers!" which points out the unfairness ofexposing a New Zealand resident to a greater liability created by foreignlaw. Cavers places great weight. in this respect, on the territorial factor:

A basis for preference that I submit would not only be rational as a principleof allocation but also be fair to visitors to the state would be a principleenabling a state to protect people within its bounds from exposure to greaterfinancial hazards than those to which their own laws would subject themwhen that exposure was created by the claims of (unrelatedl out-of-statevisitors that are predicated on the claimants* own la%%s.'

Support for this view is found in Cipolla v. Shaposka.1' The parties wereschoolmates at a Delaware school. The defendant was driving theplaintiff to the latter's home in Pennsylvania when a collision occurred in

s Supra note 86. at 205-06.

o The O'Connor court in fact sounded a skeptical note. saying that "im the light

of fifteen years of experience under Babcock. the departure from the certainty of the letloci delictus rule was not such a famous victory as it first appeared to be. i

9, D. CAVERS. THE CHOiCE-oF-LAW PROCESS 139 (1965).92 Cavers. Cipolla and Con flicts Justice. 9 DL'Q. L. Rim-v. 362 t 19711.9 439 Pa. 563. 267 A. 2d 854 (1970). This case is the subject of a symposium in 9

DuQ. L. REV. 347 (1971).

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Delaware in which the plaintiff was injured. The defendant was aDelaware resident and the car was insured and registered in that State.The issue was whether the legal effect of the guest-host relationshipshould be determined by Delaware or Pennsylvania law. Delaware had aguest statute barring a claim while Pennsylvania allowed an action of aguest passenger against a negligent host driver. Recognizing a realconflict, the Pennsylvania court proceeded to analyse the policies behindthe competing laws. The Delaware contacts which established thatState's concern were the residence of the plaintiff and the place ofregistration and insurance of the car. 94 The majority found thatDelaware's connection outweighed Pennsylvania's and that Delawarehad the greater interest in having its law applied. 9a

The majority approved Cavers' view that it would be unfair torequire the State of injury to step up its standard of behaviour or financialprotection for the benefit of the visitor whose domestic law provides ahigher standard of care or better financial protection: "By entering thestate or nation, the visitor has exposed himself to the risk of the territoryand should not subject persons living there to a financial hazard that theirlaw had not created.' '96

Cavers' preference can also be said to be giving effect to the parties'expectations - a classical consideration in favour of the lex loci delicti.Vindicating parties' expectations as a choice influence factor have beendiscounted as a myth"7 - people do not plan their relationships inanticipation of unintentional torts. But attention must be paid to thedefendant's opportunity to insure against a likely risk. The Act hasremoved the necessity of private personal liability insurance in NewZealand. Subjecting the defendant to liability arising from foreign law,against which he had no practical chance to insure would be, in Cavers'words, "not merely deplorable, but shocking".' 8

2. The opposite result is reached if the law of State X is applied.This choice may be reached through one of two methods.

The "better" or "emerging" law approach. The leading case,Clark v. Clark,99 explained this consideration as reflecting a judicialpreference for what is regarded as the sounder rule of law as between thecompeting ones. The law of State A is preferred to that of State Bbecause, in the forum's view, the law of B is outmoded, anachronistic orleads to absurd results. Much of this has been said of statutes that provide

"' The fact that the accident occurred in Delaware was not considered a relevantcontact because the Delaware statute did not set out a rule of the road.

" Roberts J., dissenting, preferred to apply Pennsylvania law as being "the betterlaw".

9t Supra note 93, at 567, 267 A. 2d at 856, citing D. CAVERS, supra note 91, at147.

17 The notion that the parties have relied on a particular law to govern their

relationship has been rejected in the Macey, Miller, Tooker and Rosenthal cases, supranote 88.

98 Supra note 92, at 365.

99 107 N.H. 351,222 A. 2d 205 (1966).

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host driver immunity100 or impose limitation on recovery for wrongfuldeath.' 0 ' The Act, a progressive piece of social legislation, is certainlynot in this category. But it is open to challenge for other reasons. Itdiscriminates against the foreign plaintiff, expressly, by depriving him ofcertain important benefits. or inherently, by setting unrealistic limitsconsidering the foreign plaintiff's needs, level of income and medicalcosts. It may therefore be labelled "'unreasonable". It is significant thatthe authorities cited in O'Connor included decisions influenced by thebetter law consideration. It did not escape the court's attention that thosecases involved anachronistic statutes. If necessary, it was prepared todeclare "unreasonable" the relevant provision of the New Jerseycompensation statute barring a tort action. '0 2

This thinking can be extended to the Act. While its motives aresalutary, its method may be questioned. Depending on the forum'spolicy, it may be argued that spreading the costs of all personal injuriesthroughout the community and restricting the right to recover entirely areunreasonable interferences with personal rights.

The Forum centered approach. "'" The better law approach can becriticized as indicative of concealed forum bias. This would be mostevident where the relevant foreign law to which the forum refuses to giveeffect can in no way be described as anachronistic or harsh. The forumcentered approach. by contrast, openly prefers the forum's own rulepursuant to the forum's policy. The theory" 4 is that the basic choice oflaw principle (subject to some traditional exceptions) is always derivedfrom the lexfori: the forum interprets and applies its own rule in the lightof its own policy, recognizing the foreign elements of the case. InO'Connor a forum centered approach was discerned as underlying a lineof cases in which the plaintiff, a domiciliary of the forum. was betterprotected by the forum's law. "'

It is doubtful whether an indiscriminate application of cases

100 E.g.. Clark v. Clark. id.: Heath %. Zellmer. 35 Wis. 2d 578. 151 N W. 2d 664(1967): Cipolla v. Shaposka. suqpra note 93 (Roberts J.. dissenting).

101 E.g.. Miller v. Miller. supra note 88: Rosenthal %. Warren. wpra note 88. See

also. Hancock. Policy Controlled State Interest Anal\tsi in (hotc " ol Lou. Aeasure ot

Damages. Torts Cases. 26 INT. & Co\iip. L.Q. 799 ( 1977).12 O'Connor v. Lee-Hy Paving Corp.. supra note 86. at 206 n. 17.103 See Nygh. supra note 71. at 937-39.104 For a general discussion. %ee Ehrenzweig. Specwh" Print ilpe ol Pricate

Transnational Law. 119681 II RECtEIL DES COURS 167 (Acadcmie de Droit Interna-tional). The universal application of the Ie% tfori must be. according to Ehrenzweig,accompanied by a concentrated effort to establish a scheme of international andinterstate jurisdiction which would secure a substantial contact of the court with theparties and facts.

10. O'Connor quoted with approval a New York decision where it was said:"'Clearly, the public policy of our courts is to protect New York domiciliaries, wherever

possible, from denial of a recovery in another jurisdiction. . . . Both logic and precedentmandate a construction consistent. whenever possible. with the State allowing a justrecovery." MacKendrick v. Newport News Shipbuilding & Dry Dock Co.. 59 Misc. 2d994. at 1011. 302 N.Y. Supp. 2d 124. at 140 (Sup. Ct. 1969).

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involving foreign guest and limitation on death recoveries statutes isjustified in a case involving immunity arising from a compensationstatute. The analogy of immunity and limited recovery should not hidethe fact that as a matter of policy evaluation, these types of statutes areworlds apart. To say, in our hypothetical case, that New Zealand law isless sound or is unreasonable compared to a common law damagessystem appears rather fickle.

Yet, it is submitted, the O'Connor decision provides the rightanswer to our problem. State X has a vital interest in seeing that itsdomiciliary is given sufficient damages enabling him, as much aspossible, to rehabilitate himself and to return to normal life. By its publicpolicy such damages are awarded at common law, recoverable from thewrongdoer. The interest of the forum in advancing this policy shouldprevail over New Zealand's interest in protecting the defendant. Sincethis is a true conflict, the unfairness of exposing the New Zealandresident to higher risk is unavoidable. 106

V. CONCLUSIONS

A comprehensive accident compensation scheme is a majorachievement of the welfare state. Its highly localized nature, however,creates potential risks for the unaware non-resident. The crux of theproblem is securing proper remedy for an injured non-resident and at thesame time maintaining protection of local residents against tort liability.Should a person who enters New Zealand on a temporary visit besubjected to that country's compensation law as an exclusive remedy? Onthe other hand, should a New Zealander be subjected to higher riskcreated by foreign law? Most of the legal debate so far has turned onconflicting rules peripheral to delictual liability: questions of specialdefences, status to sue and heads and measure of damages. These haveoften enabled courts to reach the result through "interpretation andreconciliation" of the conflicting rules. A tort/compensation conflictinvolves systems which widely differ in their policies towards the legalnature and implications of delictual liability. It thus requires a criticalchoice subjecting one set of interests to another.

The blanket approach of the rule in Phillips v. Eyre is inadequate todeal with the problem. This choice formula predetermines the result byhinging it on the absence of liability in the accident's place, paying little,if any, consideration to the personal circumstances of the foreignplaintiff. If Phillips v. Eyre is adhered to, a conflict of the type describedmust be treated as a special category.

State interest analysis addresses itself to the right issues. Current

,06 Preference for the forum policy in a true conflict situation was recommendedby Professor Currie in Notes on Methods and Objectives in the Conflict of Laws, inSELECTED ESSAYS ON THE CONFLICT OF LAWS 184 (1963).

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judicial practice appears to uphold better protection of the domiciliaryplaintiff afforded by the forum's law, thus refusing to give effect to thepolicy interests of the accident's country in protecting its owndomiciliary. The moral rightness of this choice is far from obvious.Logically, the dilemma is no easier to resolve than to say whether a glassis half empty or half full. The choice is a matter of judicial policy, thetype of discretion often exercised in conflict cases.

In an ideal world in which each political community provides for itsinjured and for families of accidents' fatalities, each claimant should bemade to recover from his own home country compensation scheme,allowing the constituent to recover for injuries suffered abroad providedthat the respective schemes apply on a personal. rather than on a merelyterritorial basis. Such arrangement would, of course, require aninternational convention.

At present, conflict methodology highlights the difficulty but isincapable of producing wholly equitable results. The answer, if one issought, can only be provided by substantive domestic law. Protection ofnon-residents' interests by extending to them full benefits under the Actis primarily a matter of costs. Even so. there remains the problem ofceilings: relatively low ceilings on loss of earnings: very low ceilings forpain and suffering: and no compensation for loss of promotion prospects,long term medical costs and capital expenses abroad. A non-costly yethelpful middle ground solution may be reached if the New Zealandscheme (and any similar scheme) were extended to provide indemnitycoverage to a New Zealand resident found liable in damages in a foreigncourt of competent jurisdiction in an action by a non-resident for personalinjury suffered in New Zealand. This seems a bold suggestionconsidering the spirit and form of the Act. But a pragmatic, farsightedresponse to the foreign plaintiff's problem would have considerableadvantages. It would alleviate individual difficulties which may bedevastating, contribute to the international order and facilitate thejudicial task of doing conflicts justice.

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